Competition among online shops intensifies

Summary:E-commerce landscape gets more crowded as transactions grow and increasing number of entrepreneurs set up online stores, says PayPal.

The e-commerce landscape is growing more competitive as the number of entrepreneurs entering the online marketplace is increasing, according to online payment service provider PayPal.

Mario Shiliashki, general manager, PayPal Southeast Asia and India, told ZDNet Asia in an e-mail, e-commerce across Asia has been growing despite the economic downturn.

In 2008, PayPal processed more than US$4 billion of total payment volume in the Asia-Pacific region, an increase of 56 percent from 2007.

Shiliashki said the more established e-commerce sites promise greater security for transactions and possess large databases of sellers, thereby allowing them to offer a wide variety of products to an equally large network of buyers.

For example, eBay's director of Southeast Asia, Allis Ghim, said of the online auction site: "We drive millions of buyers to our site each day ensuring your products and store gets exposed to buyers all around the world."

This allows entrepreneurs to save costs with regard to creating awareness, Ghim added in an e-mail to ZDNet Asia.

For entrepreneurs who host their own e-commerce Web sites, there are "drawbacks" such as the high cost of driving traffic and building awareness about the site and ensuring a safe and pleasant online shopping experience, which may include providing insurance for online purchases, Ghim said.

However, two people who run their own e-commerce sites said online marketplaces like theirs too have advantages.

Rufus Tan, head of media and marketing at Quotient TravelPlanner, said while larger sites such as eBay and Amazon are like "supermarkets and departmental stores" with a huge array of products, e-commerce sites run personally by the entrepreneurs are similar to "boutique stores" where a niche product is usually sold.

Suzanna Low, founder of Suzz.com, said sites like hers that sell unique handmade goods and items designed by these online stores themselves, together with the personalized customer service they provide are the main selling points of such merchants.

Both Tan and Low noted a reliable and affordable online payment system is key for any e-commerce site.

Tan said, because TravelPlanner handles highly-priced travel packages, it has to source for suitable and convenient payment modes for online transactions. He said payment systems that are simple to use are the best because "tedious transaction processes might lose the customer".

Currently, the company uses Telemoney as its payment system, he said.

Suzz.com provides four different payment methods--bank transfer, cash-on-delivery, check and PayPal.

Meanwhile, to facilitate secure transactions, eBay and PayPal have several similar secure features in place, such as:

  • Buyer protection programs which allow reimbursement for items not received or differ from description
  • Securing the privacy of users as financial information is never shared between buyers and sellers
  • Dedicated employees to monitor any fraud and maintain a safe marketplace.

Online or brick-and-mortar stores?
Quotient TravelPlanner does not run solely on a Web site, but it realized the wider opportunities present with an online portal.

Tan said: "Our portal site is simply a tool for clients who prefer the ease and speed of purchasing a holiday online."

However, because of the nature of its business, customization of travel packages can be done easier face-to-face, according to Tan.

"A lack of face-to-face interaction with clients is clearly a disadvantage of e-commerce," he added.

Low said brick-and-mortar stores adopt a "direct sales" model where customers can "touch and try" the products before buying them--something that online stores cannot provide.

However, Low said when a transaction does not require a sales person, "managing an online store gives me time to do other things. All you need to do is process an order when you receive a message in your inbox".

Based in Singapore, Konrad Foo is an intern with ZDNet Asia.

Topics: CXO, E-Commerce

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